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Commodity prices end 2013 weak, but US growth is promising

Scotiabank Commodity Price Index points to a bottoming in early 2014.


TORONTO — Scotiabank’s Commodity Price Index ended 2013 on a weak note, declining 1.2% month over month and dropping 6.8% compared to a year ago, the second consecutive annual decline. All sub-components lost ground in December.

“Signs point to a bottoming in the All Items Index in early 2014,” said Patricia Mohr, Scotiabank’s vice-president of economics and commodity market specialist. “Prospects for stronger US economic growth (about 3%), with China’s gross domestic product (GDP) still likely to advance by more than 7% this year, should provide a modestly positive backdrop for commodity markets.”

Here are the highlights:

• The correction in metal and mineral prices is almost over, with gold likely touching bottom in late June 2013;

• Potash prices are steady, as Uralkali concludes a higher-than-expected contract price with China;

• Copper prices rally in late 2013 and early 2014, with rumours that China’s State Reserve Bureau may step-up strategic purchases;

• Indonesia goes ahead with export ban on unprocessed nickel ores and bauxite, pointing to a gradual recovery in nickel prices; and

• The discount on Western Canadian Select (WCS) heavy oil widened to US$39.13 per barrel off West Texas Intermediate (WTI) oil in December, but will narrow to US$19.12 in February, partly due to start-up of the long anticipated new coker at the BP Whiting, Ind. refinery, upgraded specifically to process cheaper heavy oil from Canada.

Click here for the report.